STEP FOUR - Getting a Loan


In order to purchase a land trust home, you must qualify for a mortgage loan from a residential lender. There are many different types of mortgages -- in our experience, long-term fixed-rate mortgages have worked best for our homebuyers.

CHOOSING A LENDER: Over the years, we have built up relationships with four area lenders who have done an excellent job working with our homebuyers. These lenders are well-versed in land trust transactions, and have gotten good reviews by our homebuyers. If you want to buy a home from the land trust, these are the folks you will be working with:

Susan Day -- AnchorBank
Yurgen Markewycz -- Capitol Bank
Micha Petersen at Monona State Bank
Yaw Ampomah at UW Credit Union
WHAT TYPE OF MORTGAGE IS RIGHT FOR YOU? As we mentioned above, long-term fixed-rate mortgages tend to work best for our homebuyers. Other options, such as adjustable rate mortgages, interest-only mortgages, and 80/20 mortgages are available -- we have just found that they are generally not a good match to our homebuyers. Most important is finding a lender who you trust, who can give you sound advice on the type of mortgage that is best for you.

WHEDA MORTGAGES: There is a great mortgage product offered by the Wisconsin Housing and Economic Development Authority (WHEDA) for land trust houses. It is a fixed-rate, 30-year mortgage for first-time homebuyers that features interest rates significantly below what market-rate products. Most area banks and credit unions (such as AnchorBank and UW Credit Union) offer WHEDA loans that will work just great for the purchase of a land trust house.

HOW BIG A LOAN CAN I AFFORD? Really, the issue is how big a monthly housing payment you can afford. Your monthly housing payment is made up of your mortgage principle and interest, property taxes, and insurance. Your lender will be looking at how large a monthly housing payment you can afford given your household income and other long-term debts. DOWN PAYMENT: No matter how you slice it, you should expect to come up with some amount of a down payment for the purchase of a land trust home. WHEDA mortgages have their own downpayment requirements that you will need to meet. So if you haven't started alread -- start putting some money aside for a modest downpayment.

DOWN PAYMENT ASSISTANCE: For many of our homes, we have $5,000 per home available for down payment assistance. In addition, the City of Madison has an excellent program called Home Buy that provides up to $3,100 in down payment assistance. Community land trust staff will be happy to talk to you about how you can access these programs.

MORTGAGE CALCULATORS: Mortgage calculators are a great tool for you to use to get a sense of how big a mortgage you can afford. Most banks and credit unions have easy-to-use calculators right on their websites. Here are some links for mortgage calculators provided by our lenders:

Links